Financial Fitness: Vacation planning a ticket to better investments

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You may be looking forward to “getting away from it all” this summer, but as you know, vacations actually require a fair amount of planning. Some of the efforts required for successful vacations can teach us valuable lessons in other areas of life — such as investing.

Secure your home

If you’re going on vacation, you may need to take some steps to safeguard your home: stop your mail and newspaper, put on a timer to turn on lights, alert your neighbors you’ll be out of town, and so on. But it’s also important to secure your home for your family in the future, should anything happen to you. That’s why you’ll want to maintain adequate life and disability insurance.

Know your route

If you are driving to your vacation destination, you will want to plan your route beforehand to avoid time-consuming delays and detours. And to reach your financial goals, such as a comfortable retirement, you will also want to chart your course — by creating an investment strategy that is designed to help you work toward goals based on your specific risk tolerance, investment preferences and time horizon.

Keep gas in the tank

As you set out on a road trip, you need a full tank of gas in your car, and you’ll have to refuel along the way. And to “go the distance” in pursuing your financial goals, you will need to have sufficient “fuel” in the form of investments with reasonable growth potential. Without growth-oriented vehicles in your portfolio, you could lose ground to inflation and potentially fall short of your objectives. Over time, you can “refuel” by reviewing your portfolio and rebalancing it if necessary.

Don’t get burned

You and your family may use sunscreen to protect yourselves from the hot sun. Likewise, you can protect yourself from “getting burned” on investments — especially if you chase after “hot” ones. By the time you hear about these so-called sizzlers, they may already be cooling off, or they might not be appropriate for your goals and risk tolerance. Protect yourself by building a diverse array of quality investments appropriate for your needs. If you only own one type of financial asset, and a downturn hits that asset class, your portfolio could take a big hit. Diversifying your holdings will help reduce the effects of volatility. Keep in mind, though, diversification by itself can’t guarantee profits or protect against loss.

Put these principles to work to enjoy a pleasant vacation — and a potentially rewarding investment experience.

Deborah Leahy is an Investment Advisor with Edward Jones, Member Canadian Investor Protection Fund.

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